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Signature Bank Reports 2012 First Quarter Results

For more information, please visit www.signatureny.com.

This press release and oral statements made from time to time by our representatives contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. Forward-looking statements include information concerning our future results, interest rates and the interest rate environment, loan and deposit growth, loan performance, operations, new private client team hires, new office openings and business strategy. These statements often include words such as "may," "believe," "expect," "anticipate," "intend," "plan," "estimate" or other similar expressions. As you consider forward-looking statements, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions that could cause actual results to differ materially from those in the forward-looking statements. These factors include but are not limited to: (i) prevailing economic conditions; (ii) changes in interest rates, loan demand, real estate values and competition, any of which can materially affect origination levels and gain on sale results in our business, as well as other aspects of our financial performance, including earnings on interest-bearing assets; (iii) the level of defaults, losses and prepayments on loans made by us, whether held in portfolio or sold in the whole loan secondary markets, which can materially affect charge-off levels and required credit loss reserve levels; (iv) changes in the banking and other financial services regulatory environment and (v) competition for qualified personnel and desirable office locations. Additional risks are described in our quarterly and annual reports filed with the FDIC. You should keep in mind that any forward-looking statements made by Signature Bank speak only as of the date on which they were made. New risks and uncertainties come up from time to time, and we cannot predict these events or how they may affect the Bank. Signature Bank has no duty to, and does not intend to, update or revise the forward-looking statements after the date on which they are made. In light of these risks and uncertainties, you should keep in mind that any forward-looking statement made in this release or elsewhere might not reflect actual results.

 
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
       
 
Three months ended March 31,
(dollars in thousands, except per share amounts)   2012       2011  
INTEREST AND DIVIDEND INCOME
Loans held for sale $ 778 968
Loans, net 92,294 75,022
Securities available-for-sale 57,349 52,212
Securities held-to-maturity 4,792 4,333
Other short-term investments     487       533  
  Total interest income     155,700       133,068  
INTEREST EXPENSE
Deposits 21,889 21,917
Federal funds purchased and securities sold under
agreements to repurchase 5,852 5,185
Federal Home Loan Bank advances     1,156       2,293  
  Total interest expense     28,897       29,395  
Net interest income before provision for loan losses 126,803 103,673
Provision for loan losses     10,664       12,322  
Net interest income after provision for loan losses     116,139       91,351  
NON-INTEREST INCOME
Commissions 2,369 2,315
Fees and service charges 3,706 3,949
Net gains on sales of securities 1,432 7,877
Net gains on sales of loans 1,421 1,333
Other-than-temporary impairment losses on securities:
Total impairment losses on securities (5,214 ) (4,010 )
Portion of loss recognized in other comprehensive income (before taxes)   4,500       3,284  
Net impairment losses on securities recognized in earnings (714 ) (726 )
Net trading (loss) income (20 ) 43
Other income     920       276  
  Total non-interest income     9,114       15,067  
NON-INTEREST EXPENSE
Salaries and benefits 33,024 26,192
Occupancy and equipment 4,386 3,789
Other general and administrative     12,941       14,689  
  Total non-interest expense     50,351       44,670  
Income before income taxes     74,902       61,748
Income tax expense     32,533       27,164  
Net income   $ 42,369       34,584  
PER COMMON SHARE DATA
Earnings per share – basic $ 0.92 0.84
Earnings per share – diluted $ 0.90 0.82
 
     
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
 
March 31, December 31,
2012 2011
(dollars in thousands, except per share amounts)   (unaudited)      
ASSETS
Cash and due from banks $ 55,039 34,083
Short-term investments     3,907     6,071
  Total cash and cash equivalents     58,946     40,154
Securities available-for-sale (pledged $2,508,589 at March 31, 2012
and $2,672,093 at December 31, 2011) 6,609,053 6,512,855
Securities held-to-maturity (fair value $580,579 at March 31, 2012
and $571,980 at December 31, 2011; pledged $364,817 at
March 31, 2012 and $352,865 at December 31, 2011) 565,743 556,044
Federal Home Loan Bank stock 31,502 48,152
Loans held for sale 376,336 392,025
Loans, net 7,271,327 6,764,564
Premises and equipment, net 30,987 30,574
Accrued interest and dividends receivable 62,456 60,533
Other assets     274,017     261,219
  Total assets   $ 15,280,367     14,666,120
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing 3,330,030 3,148,436
Interest-bearing     9,173,892     8,605,702
  Total deposits     12,503,922     11,754,138
Federal funds purchased and securities sold under agreements
to repurchase 876,175 750,800
Federal Home Loan Bank advances 305,000 675,000
Accrued expenses and other liabilities     131,578     78,066
  Total liabilities     13,816,675     13,258,004
Shareholders’ equity
Preferred stock, par value $.01 per share; 61,000,000 shares authorized;
none issued at March 31, 2012 and December 31, 2011
Common stock, par value $.01 per share; 64,000,000 shares authorized; - -
46,412,611 and 46,181,890 shares issued and outstanding
at March 31, 2012 and December 31, 2011 464 462
Additional paid-in capital 959,874 954,833
Retained earnings 465,401 423,032
Net unrealized gains on securities available-for-sale, net of tax     37,953     29,789
  Total shareholders' equity     1,463,692     1,408,116
  Total liabilities and shareholders' equity   $ 15,280,367     14,666,120
 
         
SIGNATURE BANK
FINANCIAL SUMMARY, CAPITAL RATIOS, ASSET QUALITY
(unaudited)
 
 
Three months ended
(dollars in thousands, except ratios and per share amounts)  

March 31, 2012

   

December 31, 2011

   

March 31, 2011

PER COMMON SHARE
Net income - basic $ 0.92 $ 0.87 $ 0.84
Net income - diluted $ 0.90 $ 0.85 $ 0.82
Average shares outstanding - basic 46,205 46,179 41,349
Average shares outstanding - diluted 47,051 47,025 42,070
Book value $ 31.54 $ 30.49 $ 24.01
 
SELECTED FINANCIAL DATA
Return on average total assets 1.15 % 1.11 % 1.17 %
Return on average shareholders' equity 11.87 % 11.44 % 14.48 %
Efficiency ratio (1) 37.05 % 35.39 % 37.62 %

Efficiency ratio excluding net gains on sales of securities  and net impairment losses on securities recognized  in earnings (1)

 

37.24 % 35.63 % 40.03 %
Yield on interest-earning assets 4.30 % 4.38 % 4.60 %
Cost of deposits and borrowings 0.87 % 0.91 % 1.08 %
Net interest margin 3.50 % 3.55 % 3.59 %
 

(1) The efficiency ratio is calculated by dividing non-interest expense by the sum of net interest income    before provision for loan losses and non-interest income.

 
   

March 31, 2012

   

December 31, 2011

   

March 31, 2011

CAPITAL RATIOS
Tangible common equity (2) 9.58 % 9.60 % 8.02 %
Tier 1 leverage 9.62 % 9.67 % 8.29 %
Tier 1 risk-based 16.86 % 17.08 % 13.87 %
Total risk-based 17.96 % 18.17 % 14.91 %
 
ASSET QUALITY
Non-accrual loans $ 35,492 $ 42,218 $ 38,981
Allowance for loan losses $ 91,786 $ 86,162 $ 73,211
Allowance for loan losses to non-accrual loans 258.61 % 204.09 % 187.81 %
Allowance for loan losses to total loans 1.25 % 1.26 % 1.30 %
Non-accrual loans to total loans 0.48 % 0.62 % 0.69 %
Quarterly net charge-offs to average loans (annualized) 0.29 % 0.71 % 0.49 %
 
(2)  

We define tangible common equity as the ratio of tangible common equity to adjusted tangible assets (the "TCE ratio") andcalculate this ratio by dividing total consolidated common shareholders' equity by consolidated total assets (we had nointangible assets at any of the dates presented above). Tangible common equity is considered to be a non-GAAP financialmeasure and should be considered in addition to, not as a substitute for or superior to, financial measures determined inaccordance with GAAP. The TCE ratio is a metric used by management to evaluate the adequacy of our capital levels. Inaddition to tangible common equity, management uses other metrics, such as Tier 1 capital related ratios, to evaluatecapital levels.

 

 
                       
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
 
 
Three months ended Three months ended
March 31, 2012 March 31, 2011
(dollars in thousands)  

Average Balance

   

Interest Income/ Expense

   

Average Yield/ Rate

     

Average Balance

   

Interest Income/ Expense

   

Average Yield/ Rate

 
INTEREST-EARNING ASSETS
Short-term investments $ 91,049 75 0.33 % 65,529 46 0.28 %
Investment securities 7,158,136 62,553 3.50 % 5,961,281 57,032 3.83 %

Commercial loans and commercial

  mortgages

6,689,168 86,702 5.21 % 5,039,144 69,463 5.59 %
Residential mortgages 170,414 1,875 4.40 % 186,376 2,186 4.69 %
Consumer loans 200,569 3,717 7.45 % 196,224 3,373 6.97 %
Loans held for sale     265,929     778     1.18 %       271,180     968     1.45 %
Total interest-earning assets     14,575,265     155,700     4.30 %       11,719,734     133,068     4.60 %
Non-interest-earning assets     271,225                   302,269            
Total assets   $ 14,846,490                   12,022,003            
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand 658,742 776 0.47 % 675,457 836 0.50 %
Money market 7,497,906 17,445 0.94 % 5,769,563 16,939 1.19 %
Time deposits 891,494 3,668 1.65 % 925,330 4,142 1.82 %
Non-interest-bearing demand deposits     3,198,843     -     -         2,437,952     -     -  
Total deposits     12,246,985     21,889     0.72 %       9,808,302     21,917     0.91 %
Borrowings     1,107,780     7,008     2.54 %       1,205,706     7,478     2.52 %
Total deposits and borrowings     13,354,765     28,897     0.87 %       11,014,008     29,395     1.08 %
Other non-interest-bearing liabilities
and shareholders' equity     1,491,725                   1,007,995            
Total liabilities and shareholders' equity   $ 14,846,490                   12,022,003            
OTHER DATA
Net interest income / interest rate spread         126,803     3.43 %             103,673     3.52 %
Net interest margin               3.50 %                   3.59 %
Ratio of average interest-earning assets
to average interest-bearing liabilities               109.14 %                   106.41 %
 
SIGNATURE BANK      
NON-GAAP FINANCIAL MEASURES
(unaudited)
 

Management believes that the presentation of certain non-GAAP financial measures assists investors whencomparing results period-to-period in a more consistent manner and provides a better measure of Signature Bank'sresults. These non-GAAP measures include the Bank's (i) tangible common equity ratio, (ii) net income and dilutedearnings per share excluding the afer-tax effect of gains from the sales of SBA interest-only strip securities and (iii) corenet interest margin excluding loan prepayment penalty income. These non-GAAP measures should not be considered asubstitute for GAAP-basis measures and results. We strongly encourage investors to review our consolidated financialstatements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures arenot standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financialmeasures having the same or similar names.

 

The following table presents a reconciliation of net income and diluted earnings per share (as reported) to net incomeand diluted earnings per share excluding the after-tax effect of gains from the sales of SBA interest-only strip securities:

 
Three months ended March 31,
(dollars in thousands, except per share amounts)   2012     2011
Net income (as reported) $ 42,369 34,584
Gains on sales of SBA interest-only strip securities (39 ) (5,291 )
Tax effect     17       2,327  
Net income - excluding after-tax effect of gains on sales of SBA
interest-only strip securities   $ 42,347       31,620  
 
Diluted earnings per share (as reported) $ 0.90 0.82
Gains on sales of SBA interest-only strip securities - (0.13 )
Tax effect     -       0.06  
Diluted earnings per share - excluding after-tax effect of gains on sales of
SBA interest-only strip securities   $ 0.90       0.75  
 
 

The following table reconciles net interest margin (as reported) to core net interest margin excluding loan prepaymentpenalty income:

 
Three months ended March 31,
      2012     2011
Net interest margin (as reported) 3.50 % 3.59 %
Margin contribution from loan prepayment penalty income     (0.06 )%     (0.08 )%
Core net interest margin - excluding loan prepayment penalty income     3.44 %     3.51 %




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